Stray Dog Capital is a small venture capital firm investing in food products and services that take animals out of the equation. Launching in 2013, the business accelerated in 2015 as the number of startups broaching alternatives to animal agriculture increased. It has now invested around $11 million alongside a syndicate of around 80 different investors from trusts to individuals to foundations and other venture capital firms.

Lisa Feria

To hear more, we caught up with Lisa Feria, CEO of Stray Dog, ahead of her speaking slot at Future Food-Tech conference in London next month. She’s speaking on a panel that will discuss the industry-wide trends set to transform the consumer-goods landscape by 2030.

Are you concerned about deal flow and how do you find companies to invest in?

I haven’t had to go find them; they find me. There’s been this pent-up demand of interesting companies already formed and entrepreneurs interested in starting a company. So they see Stray Dog Capital as an interesting source of early-stage funding, especially as we’re still seeing there’s pent-up demand. So we’ve been flooded with deals and opportunities because so many different companies are looking for the type of capital we offer.

What do you offer companies aside from funding?

Did you know that AgFunder is one of the most active agrifood tech investors?

We are a bit different compared to a typical VC firm where you either you fit the investment thesis, or you don’t. For us, some of that is true. I’ll have company come looking for funding -and if I’m holding another portfolio company that does something similar or it won’t work for us to invest for one reason or another, I’ll still share that deal with our investor group. I’ll try to understand that company’s needs and mentor them as I am truly invested in this market being successful whether I’m invested financially in that company or not. I will still make sure I go above the beyond the capital to help them flourish, and a great resource for that has been the Good Food Institute, which offers a tremendous amount of resources to entrepreneurs in this space including an entrepreneur call a week.

How many people working for you?

Just me right now, but I’m hiring!

Why did you start working at Stray Dog Capital?

I’m the CEO of Stray Dog, but I didn’t set it up. I came to work here a couple of years ago. My background is heavily in food. I’m a chemical engineer by training with a background heavily in food, including roles at General Mills, and I did a general management program at Proctor & Gamble where I got to work on huge brands. We were able to do really interesting “innovative” things with those brands and operate them a bit like a startup. I then wanted to do more on a day-to-day basis and not just lead one company, but help a group.

As an animal lover and vegan, animals have always been near and dear to my heart, so I wanted to find a connection between those two areas of interest and then found Stray Dog Capital.

Who are the winners and losers in the alternative meat space going to be? What are the key challenges startups are facing?

There is nothing but upside at this point. For plant-based alternatives, pricing is the largest challenge and opportunity hands down, and you can influence it in a few different ways:

Volumes: the more volume you process, the lower you can price

Ingredient sourcing. A lot of plant-based meat is made out of the same stuff — soy and pea — but there are so many plant proteins that are unexplored and underutilized. There is a huge opportunity to find better ingredients nutritionally and cheaper. A few different companies are looking to tap this opportunity, but they haven’t quite cracked it yet

Scale and manufacturing

For clean meat, those startups have nothing but opportunity, but they still need to go and figure how to scale up. It’s a fantastic proposition and a great market to receive, so they need to make sure that can make a lot of it, and everyone can get access to it.

When you’re talking to a startup that’s approached you for funding, what are the reasons not to invest in them? Are there any specific alarm bells?

A lack of transparency is a concern. Some entrepreneurs want to present such a good picture but don’t want to share any downsides or less pretty parts. As a partner, I can’t help to guide them if I don’t know the whole picture. So I’ll be concerned if I don’t think I’m getting the whole story and the picture that’s being painted is too rosy.

Entrepreneurs also need to be consistent and demonstrate a high level of integrity across their interactions with all investors. Investors talk to each other a lot more than entrepreneurs believe; I basically know everyone else putting money into this space, and we chat all the time, asking each other what we think of various companies.

Lacking diversity is another alarm bell. Data has shown consistently that the most diverse teams are the most successful, so I try to guide our companies to make sure they pay attention to this and have enough diversity on staff and on the board to ensure their thinking is guided in a rounded fashion.

Are you concerned about the level of processing going into some of these alternatives, particularly as consumers are trending towards simpler, ‘clean label’ foods with minimal processing?

It seems to me like a lot of the plant-based verticals start more processed, then become less processed as the company becomes more sophisticated with ingredient management. If you look at some veggie burgers, they were very processed in the beginning, then little by little the market pushed them in another direction. I know one of the major plant-based meat companies is looking very aggressively at simplifying its ingredients and telling investors that it’s removed X, Y, Z ingredients and put this in that’s cleaner, healthier and shorter.

Hampton Creek says it’ll have a cultured burger on the market by the end of the year? Is that possible?

They are a certainly very innovative and a no holds barred group who have figured out how to do things and get places before anyone else, particularly from a distribution standpoint. I amnot privy to their internal developments, but from the four other clean meat companies I’m invested in, I think it would be hard to do at scale in that timeframe. Can they come out and show a small amount of something? Sure, as others have. If they were to scale nationally or regionally in that timeframe, that would be fantastic, but I’d be surprised. It’s an incredibly complex process and product, with many incredible minds working on it and they’re struggling to get that scale at this point.

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